Minggu, 17 Juli 2011

US building slump squeezes scrap copper market - Reuters

Supplies in the U.S. copper scrap market remained tight at the start of the third quarter, as a lingering slump in industrial demolition rates made material, especially higher-grade material, harder to come by.

The prolonged downturn in the housing sector has squeezed supplies, along with a general reluctance from producers and owners to release more metal into the marketplace as smaller quantities of the secondary scrap metal have limited their ability to quickly fill shipment containers.

"The generation is a little bit less because housing demolition continues to not be there, so your insulated wire units and clean, high-grade copper are just not as prevalent as they had been in the past during the summer months," said Matthew Heitmeier, director of non-ferrous metal marketing with Louis Padnos Iron & Metal Co.

"People don't want to sell until they know that they have a full load to ship."
It was not clear whether this slower business trend will extend into the autumn.
"I don't see anything that would portend a significant increase in the flow of copper scrap, unless there is a very dramatic price rise and some quantities that may still be withheld hit the street and start to move," said Robert Stein, vice president of nonferrous marketing and trading with Alter Trading Corporation.
While higher grades of scrap have become harder for buyers to get their hands on, lesser grades have flourished, with the lion's share of this material heading over to Asia.

"There has been tremendous buying of electric motors and insulated copper wires ... the lower-grade items, whereas the higher grade material has not picked up," said Marc Kaplan, president of Mews Metals Trading in New Jersey.
As a result, the spreads or discounts that the secondary metal tends to own against the benchmark COMEX futures price HGU1 have barely budged over the last 30 days, dealers said.

Spreads for Bare Bright copper, often regarded as the highest grade of copper scrap, stood at 5 to 12 cents below the COMEX futures price, unchanged from the beginning of June.

No. 2 copper scrap, which typically consists of a mixture of wire and tubing with a 96 percent copper content, was quoted at 40 to 45 cents under, in a bit from an early-June range of 42 to 48 cents under.

"Spreads are staying the same because buyers are having trouble finding material, so they can't widen them," one East Coast dealer said.
This doesn't seem to be the case in China. June import data showed shipments of copper scrap into China climbed to 420,000 tonnes, their highest level so far this year. (Graphic: r.reuters.com/xyr32s )

While China will remain a net importer of copper in both its primary and secondary forms, buying patterns could become erratic as unfavorable arbitrage opportunities between the Shanghai and COMEX markets and Beijing's clamp down on credit and lending standards limit the metal-consuming giant's market presence.

"It will become a tug-of-war between the higher market price and the need for the resource," said David Chiao, vice president at Atlanta-based recycler Uni-All Group Ltd.